Mike Novogratz Optimistic Bitcoin Will Rise Again, Not Worried About Greyscale's Efforts To Acquire GBTC

Mike Novograts, founder of Galaxy Digital, predicts an increase in Bitcoin prices. (Photo; Doc. Yahoo Finance)

JAKARTA - Mike Novogratz, founder of Galaxy Digital, is not worried about the impact of the Grayscale Bitcoin Trust (GBTC) liquidation on the price of Bitcoin. He believes that investors will switch to other, more profitable products, such as the Bitcoin Spot ETF, which will drive Bitcoin demand and prices in the long term.

GBTC is an investment product offered by Grayscale, the world's largest crypto asset management company. GBTC allows investors to gain exposure to Bitcoin without having to buy or store it directly. GBTC is trading on the secondary market at premium prices or discounts against the value of the underlying Bitcoin net asset (NAV).

However, GBTC is facing intense competition from the Bitcoin Spot ETF, especially since this investment product was approved by US regulators. The Bitcoin Spot ETF is an investment product that tracks the price of Bitcoin in real-time and is trading on the stock exchange. Spot's Bitcoin ETF offers lower costs, higher liquidity, and lower tracking errors than GBTC.

One of crypto analysts, Chris J Terry, head of BTCdata architects, issued a warning that the price of Bitcoin is likely to stagnate or drop until GBTC's liquidation is complete. He estimates that there are about 25 billion GBTC dollars (Rp356.3 trillion) that investors will release in the coming weeks, as they are not satisfied with GBTC's performance.

Terry also criticized Grayscale's decision to maintain an ETF rate of 1.5%, which he considers a strategic error that could harm investors and Grayscale's reputation.

"I don't agree with this. Even though I think people will sell GBTC, I think most of them will turn to other ETFs - $BTCO is my favorite!! Let's not miss the forest in the middle of the trees. Now it will be much easier for the boomer generation to buy cryptocurrencies. And you can get a 4\times5 leverage of this..." said Chris J Terry, head of BTCdata.

$BTCO stands for Bitcoin Strategy ETF, which was launched by ProShares on October 19, 2021. The ETF is the first Bitcoin Spot ETF to be traded in the US, and has raised $1.1 billion in assets in less than four months.

Novogratz, known as one of the biggest Bitcoin supporters, disagrees with Terry's analysis. He argues that GBTC liquidation will not have a negative impact on the price of Bitcoin, as investors will move their funds to another Bitcoin Spot ETF, which will increase demand and the price of Bitcoin in six months.

Novogratz also highlighted the long-term potential of Bitcoin and the development of the Bitcoin Spot ETF in the US. He said at CNBC's "Squawk Box" event on January 11, 2024, that he expects there to be two or three dominant Bitcoin Spot ETFs on the market.

Novogratz added that Spot's Bitcoin ETF will make Bitcoin more accessible to retail and institutional investors, without requiring broad technical knowledge. He also expressed optimism that new investors will benefit from the growth potential of Bitcoin, which has limited supply and a strong community.

Taking into account competition among big players such as Invesco, Fidelity, and BlackRock, who are also planning to launch their own Bitcoin Spot ETF, Novogratz emphasizes the importance of low cost and low tracking errors for investors. He predicted that the price of Bitcoin would increase substantially due to the Bitcoin Spot ETF, as demand increases, especially from long-term Bitcoin holders who are reluctant to sell their BTC assets.